Gulf of Mexico oil production could peak in 2013

ENERGYA new phase in the Gulf

TOM FOWLER, Copyright 2009 Houston Chronicle

Published 5:00 am, Tuesday, May 5, 2009

Oil production in the Gulf of Mexico could peak at more than 1.8 million barrels per day by 2013 under the industry’s best-case scenario, but natural gas production will likely continue its decadelong decline, according to a government study released Monday at the Offshore Technology Conference.

About 1.1 million barrels of oil per day were produced in the Gulf in 2008, according to the Minerals Management Service, with about 829,000 coming from deep-water fields — those drilled in more than 1,000 feet of water. Natural gas production was about 6.43 billion cubic feet per day, with about 2.6 bcf coming from the deep water.

Oil production from projects the industry has currently or is committed to starting up could peak at 1.6 million barrels by 2011, according to the agency’s forecast, but if announced discoveries and undiscovered resource estimates are included, the peak could reach 1.8 million barrels by 2013.

“The deep-water frontier has entered a new phase,” said Mike Prendergast, chief of staff for the agency’s Gulf of Mexico region, with technology developments leading the charge to larger and deeper projects.

The Gulf of Mexico accounts for about 25 percent of domestic oil production and 15 percent of natural gas output, according to the agency.

Royal Dutch Shell’s Perdido platform, in 8,000 feet of water 200 miles south of Freeport, represents the trend’s cutting edge and will be the new oil and gas deep-water champion when it comes on next year with a 130,000-barrel-per day capacity. The Anadarko Petroleum-operated Independence Hub is also in 8,000 feet of water about 185 miles from New Orleans. It just pumps natural gas.

The number of production projects operating in depths greater than 1,000 feet grew 8 percent last year to 141, according to the report, while 57 percent of Gulf oil and gas leases in 2008 were in the deep water, up from 54 percent a year ago.

Gulf natural gas production peaked in 1997 at 14.1 bcf but has dropped since then due to both the decline in production in mature shallow-water fields and the fact that the deepest formations tend to have much more oil than natural gas. Of the deep-water finds under development, it’s predicted that 84 percent of the output will be oil and only 16 percent natural gas.